Peso hits new record low at 63.8 per dollar

The Philippine peso continued its record slide at the start of the new trading week, weakening to an intraday low of 63.8 per US dollar on Monday. The local currency opened the session at 63.535 before extending its losses in early trading, based on data from the Bankers Association of the Philippines.

Monday’s intraday trough of 63.8 per dollar surpassed the previous intraday record low of 63.62, underscoring the sustained pressure on the currency. The latest move extends a run of record-setting sessions that began the previous week.

The peso’s latest slide follows a sequence of record lows logged in the prior week. On Friday, the currency closed at 63.615 per dollar, marking record lows for five consecutive trading days and touching an intraday low of 63.62 during that session.

The 63.615 close on Friday represented a decline of 9.5 centavos from the previous session’s finish of 63.52. Traders have cited a trading range expectation of 63.30 to 63.80 per dollar for the current week, reflecting ongoing volatility around the currency’s new lows.

Market attention is centered on the upcoming meeting of the US Federal Reserve’s Federal Open Market Committee on October 27 and 28. Fed funds futures data imply less than a 10% chance of another US rate increase at Wednesday’s policy announcement, while still indicating a high probability of a hike in December.

The September US rate increase, the first since 2023, has contributed to dollar strength that is pressuring emerging market currencies, including the peso. Traders expect the peso’s performance this week to be influenced by whether the Fed indeed keeps rates steady and by how guidance on future moves shapes dollar demand.

The peso’s weakness is unfolding against a backdrop of elevated inflation risks in the Philippines. The Bangko Sentral ng Pilipinas has stated that inflation is likely to stay elevated until next year and has kept its 2028 inflation estimate at 3.3% while expecting an average of 6.1% for this year and a higher 2027 forecast of 6%.

Remarks from BSP Governor Eli M. Remolona, Jr. that the central bank does not target a specific peso level and intervenes only to smooth large currency swings have also shaped market sentiment. Traders indicated that this stance may have encouraged some participants to test levels at which the central bank might step in.

The currency’s decline has coincided with moves in the domestic bond and equity markets. Government securities yields have generally moved higher, with analysts pointing to peso weakness and inflation concerns as key drivers, even as easing pressure from US Treasury yields limited upward moves at the longer end of the curve.

Philippine equities have also faced headwinds. The Philippine Stock Exchange index fell 0.88% to 5,728.63 on Friday, with fresh BSP tightening and the weaker peso weighing on sentiment. The combination of higher interest rates, persistent inflation risks, and currency depreciation has contributed to a more cautious outlook across local financial markets.